The Wavy Tunnel: End of Trend Trades Jody Samuels

The Wavy Tunnel
Module 3
End of Trend Trades
Jody Samuels
Welcome to Module 3!
≈ Welcome to the Wavy Tunnel Trading Technique Module 3!
≈ We hope you are enjoying this wonderful method of

recognizing trades.
≈ One of the best Fibonacci and Elliott Wave based Trading

Strategies!
≈ In Module 3 we will cover the Two End of Trend Trades –

Price to Wave (PW) and Fill the Gap (FG).
© 2012 FX Trader’s EDGETM All Rights Reserved

End of Trend Trades
≈ End of Trend Trades – Spot the Setup

Module 3
≈ Identify Trade Entry
Learning Objects
≈ Set Stop Losses
≈ Determine Profit Taking Exit Strategy
≈ Examples

Quote
“Success is a lousy teacher. It seduces

smart people into thinking they can't
lose.”
Bill Gates

Introduction
Objectives
≈ Understand the background behind each End of Trend Trade
≈ Learn how to trade each of the two methods:
≈Spot the setup
≈Trigger the entry
≈Set the stop loss
≈Take Profits
≈ Continue picturing yourself Riding the Waves and Cashing in on
Profits using the Wavy Tunnel for Success.

Overview of Wavy Tunnel Trades

Wavy Tunnel Trades – End of Trend
Awesome Oscillator
5/34/5 MACD, also known as the Awesome Oscillator, is a momentum indicator that
takes a 5-bar and 34-bar simple moving average, plotted in a histogram of 100 bars
and a maximum of 140 bars on the screen. 5 SMA signal line on the histogram.
Can also use 12/26/9 or a 5/34/5 MACD.

Uses:
1. Identifies the top or bottom of wave 3.
2. Determines the end of wave 4, or when the minimum requirements have been
met.
3. Indicates the end of a trend and top or bottom of wave 5 with oscillator
divergence.
4. Signals change in direction of current momentum.

Awesome Oscillator
Wave 5 Divergence
3
Engulfing
Pattern
5
Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

Price to Wave (PW)

Trade Setup Conditions:
Price headed into space away from the Filter, Wave and Tunnel.
Divergence present in the Awesome Oscillator after a 5-wave sequence has occurred.
Overbought and oversold conditions on RSI or Stochastic indicator.
“Rubber Band Effect” – Current price hyper-extended from Wave.
Conservative Entry Point:

Enter trade as it heads back towards the Wave.
Enter with a reversal candlestick pattern such as hammer, shooting star, morning and
evening stars, engulfing candles.

Spot the Setup
Price to Wave (PW)
Engulfing
Pattern

Spot the Setup
Price to Wave (PW)
Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

Spot the Setup
Price to Wave (PW)

Spot the Setup
Price to Wave (PW)

Fill the Gap (FG)

Trade Setup Conditions:
Bounce off or through the Wave headed for a collision with the Tunnel after the Wave 2/B ends.
Divergence present in the Awesome Oscillator after a 5-wave sequence has occurred.
Either beginning a Wave C or Wave 3. Zigzags work best.
Look for current gap between Wave and Tunnel to be greater than 75 pips.
Conservative Entry Point:

Enter the trade as it heads back through the Wave when candles are exiting the Filter.
Look for Reversal Candlestick Pattern.

Spot the Setup
Fill the Gap (FG)

Spot the Setup
Fill the Gap (FG)

Spot the Setup
Fill the Gap (FG)

Spot the Setup
Fill the Gap (FG)

Price to Wave (PW) and Fill the Gap (FG) Combo
Comments:
Very often the PW trade is a setup for the Fill the Gap trade.
Taking the PW trade means getting into a reversal trade early.
Use the Fill the Gap trade as a continuation of the Price to Wave trade.
In Elliott Wave terminology, the PW/FG trade presents as an ABC zig zag correction or even
an ABC flat correction.
If the PW/FG trade is the start of a new impulse, it will then lead into the BO-1 trade.

Trigger the Entry
“Entry” for the PW Trade:

Triple Divergence is better than Double Divergence for the PW. Enter on a Reversal Candlestick
Pattern OR wait for the candle to close above or below the 12 EMA (Filter). Think of a Rubber
band snapping back to the Wave for this setup.
“Entry” for the FG Trade:

Early BUY or SELL with the PW trade. The most effective PW/FG Combo is an ABC Zig Zag
Corrective Pattern, or a Wave 123. Wave 1/A is the PW, and Wave 2/B is the setup for the FG.
Enter the FG on a Reversal Candlestick Pattern after a 2/B. Confirm with a close above or below
the Filter.

Trigger the Entry
Price to Wave (PW)
Stop BUY
OR Stop BUY

Trigger the Entry
Price to Wave (PW)
Stop SELL

Trigger the Entry
Price to Wave (PW)
Stop SELL

Trigger the Entry
Fill the Gap (FG)
Stop BUY

Trigger the Entry
Fill the Gap (FG)
Stop SELL

Trigger the Entry
Fill the Gap (FG)
Stop SELL

Set the Stop Loss
“Stop Loss” for the PW trade:
Place stop above or below the extreme price high or low of Wave A/1.
“Stop Loss” for the FG trade:

Place stop above or below the extreme price high or low of Wave B/2.

Set the Stop Loss
Price to Wave (PW)
Stop BUY
OR Stop BUY
Stop loss

Set the Stop Loss
Price to Wave (PW) Stop loss
Stop SELL

Set the Stop Loss
Price to Wave (PW)

Stop loss
Stop SELL

Set the Stop Loss
Fill the Gap (FG)
Stop BUY
Stop loss

Set the Stop Loss
Fill the Gap (FG) Stop loss
Stop SELL

Set the Stop Loss
Stop SELL

Determine Profit Taking Exit Strategy
PW: “Profit Taking” (PT) Exit when:
Candle closes through the Wave at the completion of Wave A/1.
FG: “Profit Taking” (PT) Exit when:
Candle reaches the Tunnel or a Reversal Candlestick Pattern emerges at the completion of
Wave C/3.

Take Profits
Price to Wave (PW)
PT
Stop BUY
OR Stop BUY
Stop loss

Take Profits
Price to Wave (PW) Stop loss
Stop SELL
PT

Take Profits
Price to Wave (PW)

Stop loss
Stop SELL
PT

Take Profits
Fill the Gap (FG)
PT
Stop BUY
Stop loss

Take Profits
Stop SELL
PT

Take Profits
Stop SELL
PT

Take Profits
Fill the Gap (FG)

Observations
Multiple Time Frame Analysis will be introduced in Module 4 to be able to see synergies
between different time frames. For example, a Wavy Tunnel Breakout Trade (BO) on the
1-hour chart is consistent with a Fill the Gap Trade (FG) on a 4-hour chart.
The smaller time frame will give an earlier entry strategy. For example, a BO trade on a 15-
minute chart precedes the BO on the 1-hour chart.
Module 5 will provide real trades and a discussion about fine tuning entries and exits and
weeding out the low probability trades.

The Wavy Tunnel: End of Trend Trades Jody Samuels

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The Wavy Tunnel

≈ Welcome to the Wavy Tunnel Trading Technique Module 3!

≈ We hope you are enjoying this wonderful method of

≈ One of the best Fibonacci and Elliott Wave based Trading

≈ In Module 3 we will cover the Two End of Trend Trades –

© 2012 FX Trader’s EDGETM All Rights Reserved

≈ End of Trend Trades – Spot the Setup

© 2012 FX Trader’s EDGETM All Rights Reserved

“Success is a lousy teacher. It seduces

© 2012 FX Trader’s EDGETM All Rights Reserved

© 2012 FX Trader’s EDGETM All Rights Reserved

© 2012 FX Trader’s EDGETM All Rights Reserved

Can also use 12/26/9 or a 5/34/5 MACD.

© 2012 FX Trader’s EDGETM All Rights Reserved

Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Overbought and oversold conditions on RSI or Stochastic indicator.

“Rubber Band Effect” – Current price hyper-extended from Wave.

Conservative Entry Point:

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Fill the Gap (FG)

Either beginning a Wave C or Wave 3. Zigzags work best.

Conservative Entry Point:

Look for Reversal Candlestick Pattern.

© 2012 FX Trader’s EDGETM All Rights Reserved

Fill the Gap (FG)

Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

© 2012 FX Trader’s EDGETM All Rights Reserved

Fill the Gap (FG)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Fill the Gap (FG)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Fill the Gap (FG)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW) and Fill the Gap (FG) Combo

Taking the PW trade means getting into a reversal trade early.

© 2012 FX Trader’s EDGETM All Rights Reserved

Trigger the Entry

“Entry” for the PW Trade:

“Entry” for the FG Trade:

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Price to Wave (PW)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved